Mad Money Recap

Return to Article

Cramer's 'Mad Money' Recap: Avon, Clorox Panic-Proof

TheStreet.com Staff

Click here for an archive of Cramer's "Mad Money" recaps.

Avon Products (AVP Quote) and Clorox (CLX Quote) are two "indestructible" stocks that should work well in a recession, Jim Cramer told viewers of his "Mad Money" TV show Friday.

Usually when investors hear the word indestructible, they think of Coca-Cola (KO Quote), PepsiCo (PEP Quote) or Altria (MO Quote), he said. Now, Cramer said, Avon and Clorox should fall into that category.

In general, market players should purchase these stocks at times when investors, acting out of panic and fear, start unloading everything else, he said.

Cramer said Avon's Andrea Jung has redeemed herself since he put her on his "CEO Wall of Shame" in 2006. He said the company's stock is going up because its international business is growing fast, the company is restructuring itself, and Jung has been doing a great job educating investors on what the company is doing.

"Avon is making good long-term decisions," he said. For example, the company is removing inactive reps in China and focusing money on what works. Cramer said its operating profit has jumped because "they know what spending works so they can spend less to get the same or better results."

Cramer said he had previously given up on the company before it reported an unexpected blowout quarter on Oct. 31. He said the company is growing again, especially overseas, where it has benefited from growth in its bleach and laundry products business. He also said Brazil and China could be huge markets for the company.

Game Plan

In his "Game Plan" segment, Cramer said it's time to buy Tekelec (TKLC Quote), "a nice little telephone-equipment supplier."

For most of the year, Tekelec took a beating, but the situation turned around after the company cut costs and became more profitable, he said. Cramer noted the company recently sold its switching business so it can focus on its core signaling business.

Overall, Cramer said Tekelec's business is picking up, its balance sheet looks good, and it has a good buyback program.

Cramer considers the stock risky because Cisco is also a competitor in the business. However, he said Tekelec should go higher because it is too cheap. And, he opined, if it continues to produce another couple of good quarters, it could even be bought by a company like Ericsson (ERIC Quote).

Cramer rated Cisco (CSCO Quote) a buy ahead of its quarter next week.

Cramer also said Hologic (HOLX Quote), which he owns for his charitable trust, Action Alerts PLUS, is a buy ahead of its quarterly report next week. Allergan (AGN Quote), the stock that plays on America's vanity, reports next week as well. But here Cramer advised viewers to wait until people sell it off before buying it.

Same with Foster Wheeler (FWLT Quote), he said. Long term, he noted, this stock is intact, but it seems to go down every time it reports, so investors should wait until that happens and then buy.

Furthermore, he warned, it's time to get out of "no-growth" CBS (CBS Quote) and get into Consolidated Edison (ED Quote), which is safer and has a better yield, or into Viacom (VIA-B Quote) for growth.

Second Thoughts on Diana Shipping

Cramer welcomed Diana Shipping's (DSX Quote) Simeon Palios and asked the chief where dry shipping rates are going.

The dry-bulk market is a "very dangerous" place to predict future rates, Palios responded. Short-term, he said, the cargo movements make him optimistic of the freight market.

In terms of new competition, Palios said eventually he believes more dry-bulk ships might come to the market. For the moment, he said his company is safe as the forces of supply and demand look good for the short and medium term.

"I like the stock, but am not hitting the bull button," Cramer said. "That was not the reassurance I was looking for."

GFI Group a Bright Spot

Although it seems like brokerage stocks are getting killed everywhere, GFI Group (GFIG Quote) was up eight points today, said Cramer, who rated it a buy. To make sense of this, he called CEO Mickey Gooch to the show.

Gooch said the stock is up because the company, acting as a middle man in the markets, benefits from increased market volatility.

"We're dealing with the professional markets," explained Gooch, noting the company's customers are big banks and securities houses that trade millions of dollars at a time. If these clients are worried about subprime exposure or credit worthiness, "they can buy GFI's credit default protection," he said.

Lightning Round

Cramer was bullish on United Therapeutics (UTHR Quote), Flextronics (FLEX Quote), CVS Caremark (CVS Quote), Becton Dickinson (BDX Quote), Hologic (HOLX Quote), Ford (F Quote), Cisco (CSCO Quote) and Verizon (VZ Quote).

Cramer was bearish on Plexus (PLXS Quote), St. Jude Medical (STJ Quote), Toyota Motor (TM Quote), Affiliated Computer Services (ACS Quote), DuPont (DD Quote), Dendreon (DNDN Quote) and Eaton Vance (EV Quote).

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

For more of Cramer's insights during the Lightning Round, click here.